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The Keystone XL Pipeline Influence Scandal

Posted Oct. 18, 2011 / Posted by: Kelly Trout

Evidence is mounting that the State Department’s review of a proposed tar sands oil pipeline has again been corrupted by bias, lobbyist influence and conflicts of interest. The growing scandal is making front-page headlines and putting more pressure on President Obama to stop the pipeline.

The proposed pipeline by the Canadian company TransCanada — the Keystone XL pipeline — would transport the world’s dirtiest oil from Canada’s tar sands to refineries on the U.S. Gulf Coast. The pipeline threatens drinking water, air quality and the livelihoods of the people who live along its route. It would also act as a “carbon bomb” that jeopardizes our climate.

The State Department has the lead authority to determine whether to approve the Keystone XL pipeline by conducting and environmental impact assessment. The law requires the State Department to act impartially and undertake an independent, rigorous, science-based analysis of the controversial pipeline’s risks. Unfortunately, it has become clear that the State Department’s review is deeply, irreparably flawed.

First of all, the firm hired by the State Department to conduct the pipeline’s environmental review, Environmental Resources Management, has financial ties with TransCanada (the company seeking to build the pipeline). According to Mother Jones, State Department employees clumsily edited the firm’s Conflict of Interest filings in order to hide ERM consultants’ previous work for TransCanada. Moreover, Inside Climatehas reported that ERM subcontracted crucial parts of its report to consulting firms with deep ties to oil and pipeline companies. As a result, this environmental review downplays the climate impacts of the pipeline. The EPA, like Friends of the Earth, has criticized the review for its inaccurate assessment of the oil sands crude market, understatement of climate impacts from tar sands extraction, and dismissal of the impact on communities along the pipeline route, including in the vicinity of the Texas refineries.

Secondly, TransCanada and the Canadian province of Alberta have hired a web of former Obama and Kerry officials and campaigners to lobby for the pipeline. The Financial Times has found that Alberta made a point to hire former Obama officials and Kerry staff in order to win approval from the State Department instead of focusing on Congress like most lobby groups. TransCanada and Alberta’s lobbyists have been trying to convince the administration that the pipeline will create jobs and pose no threats to the environment, in the hopes that they can get the pipeline approved.

Friends of the Earth’s recent Freedom of Information Act request to the State Department identifies more than two dozen of these lobbyists, lawyers and consultants helping to push the pipeline. Heading the list is Anita Dunn, a former White House communications director and senior advisor to the president’s re-election campaign and the former communications director for the Democratic Senatorial Campaign Committee under then-Senator Kerry. Dunn is now a principal with the lobbying firm SDKnickerbocker, which represents TransCanada. Other pipeline lobbyists include three former U.S. ambassadors to Canada, David Wilkins, Gordon Giffin and Jim Blanchard and three former members of John Kerry’s presidential campaign team, Brandon Pollak, Graham Shalgian and David Castagnetti.

This is not the first time that the State Department has let TransCanada call the shots. Previously, the State Department hired the consulting firm CardnoEntrix, even though the firm listed TransCanada as a major client (a fact which should have disqualified it under the National Environmental Policy Act). Not surprisingly, CardnoEntrix’s review downplayed the climate impacts and potential risks of the pipeline. A Freedom of Information Act request by Friends of the Earth uncovered close ties between State Department officials and TransCanada and multiple e-mails showed State Department employees coaching TransCanada lobbyist (and former Hillary Clinton campaign official) Paul Elliott in his efforts to build support for the pipeline.

In his 2008 campaign, President Obama promised to tell lobbyists that "their days of setting the agenda are over." Unfortunately, his State Department has failed to live up to this promise. The evidence is in: the State Department is again running a sham process, rigged in favor of dirty oil. It is up to President Obama to make things right.

Key concerns

Glaring conflict of interest — The firms hired by the State Department to prepare the pipeline’s environmental impact statement and hold public hearings — Cardno Entrix and Environmental Resources Management both had financial ties with TransCanada. Worse, State Department officials failed to flag inconsistencies in ERM’S bid proposal, which might have excluded it from assessing the pipeline.

Broad web of lobbyist ties— TransCanada and pipeline proponents have hired a broad array of lobbyists with close ties to Secretary of State John Kerry and President Obama to push for the Keystone XL. These including major Kerry and Obama officials and campaign staff.

Lopsided environmental analysis understates threats— The draft environmental impact statement that was largely produced by ERM has been strongly criticized by the EPA. The most recent draft has substantial flaws: It inaccurately assesses the oil sands crude market, it excludes the United States’ responsibility to explore production methods to reduce greenhouse gas emissions, it does not address potential spills and how to monitor and fix them, and it does not give opportunities for public comment. The draft also fails to include serious analysis of alternative routes that would avoid the sensitive Ogallala aquifer, which provides drinking water to millions of people.